Demand for staff falls for the second month running

Oct 04 2002 by Brian Amble Print This Article

The latest Report on Jobs, published by the Recruitment & Employment Confederation (REC) and Deloitte & Touche casts further doubt on the health of the UK labour market and hints at worse to come.

The survey is one of the most comprehensive guides to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers, as well as data on national newspaper recruitment advertising.

Several key indicators all point to a deteriorating labour market. While the number of people placed in permanent jobs by recruitment consultants rose for the seventh successive month in September, the rate of growth of placements eased to the slowest since March. Demand for permanent staff was particularly weak. Redundancies in the private sector also led to a marked increase in staff availability.

Recruiters reported lower demand for staff at the upper end of the labour market and confirmed that many clients continued to show a preference for flexible workers in light of uncertain business conditions.

Adding to recruiters’ sense of unease, the rate of growth of agency billings was the weakest since February, in part reflecting a further marked easing in the rate of growth of demand for temporary staff.

Unsurprisingly, the Survey also pointed to a steady decline in the rate of salary rises. Growth in permanent salaries has been declining since May, but September marked the first time in nine months that salaries actually fell. The growth of temporary staff pay rates also slowed.

According to Brett Walsh, Head of UK Human Capital at Deloitte & Touche, the findings suggest that worse is to come.

"The latest report shows that a further slackening of the UK labour market took place in September as employers in both manufacturing and services continued to shed staff. Furthermore, two important leading indicators of employment – the Vacancies Index and the Press Recruitment Advertising Index – are both now signalling falling demand. This is likely to translate into both a further acceleration in the rate of decline of employment and further downward wage pressures beyond that seen in September."

Decreasing demand for staff was also signalled by a further sharp decline in press recruitment advertising in August. The annual rate of this decline picked up marginally for the first time since March and, with levels some 32 per cent below a year ago, was the fastest for three months.